Loans based on sustainability objectives offered in Oman
Muscat: Loans with repayment terms linked to sustainability goals are provided to businesses in Oman.
One such bank is HSBC, which late last year secured its first sustainability-related loan to Oman. Issued to an oil service company, the client borrowed money when loan terms were tied to sustainability factors such as the amount of wastewater generated.
“As a global business, we recognize that our planet urgently needs action to protect communities, businesses and the natural environment from the adverse effects of climate change,” said Simon Adcock, Head of Commercial Banking. at HSBC Oman. “We also recognize the potential impact of climate change and have set out an ambitious plan to unlock climate solutions that can support our customers in their energy transition and journey to net zero.”
Oman’s renewable energy sector is full of potential. Aiming to diversify its energy sources, the government has set an ambitious target of covering 30% of its electricity demand with renewable energy projects by 2030. This presents substantial opportunities for businesses and the economy at large.
With the launch of several large renewable energy projects in the Sultanate, Oman Power & Water Procurement Company (OPWP) expects solar, wind and waste energy projects to account for up to 30% of the country’s energy mix by 2030.
“As a community, taking personal responsibility for something as simple as waste can collectively make a substantial contribution to sustainability, for example, too often plastic waste is discarded with no regard for the environment,” Adcock said. “Anyone can play a role.
“It has become more important than ever for businesses to embrace innovation and sustainability, unlock new growth opportunities and stay relevant in the new low-carbon economy,” he explained. . “That’s why we’re stepping up our efforts to help businesses, big and small, transition to more sustainable business models.
“We aim to unlock climate solutions such as clean technology innovation, sustainable infrastructure and nature-based solutions. Radical ideas are needed to tackle climate change, but turn concepts into commercially viable solutions at the global scale requires investment and governance.
In January 2021, HSBC formed a dedicated Sustainable and Transition Finance team in the Middle East to help institutions, businesses and individuals make the transition to a more sustainable economy. The team draws on deep technical knowledge of environmental, social and governance opportunities, challenges faced by clients and the changing regulatory environment.
In addition, the HSBC Sustainable Financing & Investing Survey 2021, which took the pulse of major issuers of securities and the companies that invest in them, showed that 97% of issuers in the region who responded to the survey increased their attention to environmental and social issues over the past year.
Nearly 45% of issuers said they already perceived the impact of climate change on their business or operations, up from just 7% a year ago. It is now essential for companies to engage on the topic to better understand how they can realize the economic, environmental and social benefits of adopting strong sustainability policies.
Explaining the challenges facing sustainable development efforts in Oman and other countries, Adcock said, “The challenge is not just in Oman but in many emerging economies. At HSBC, we are committed to working with our customers on their journey to reducing carbon emissions. We mobilize finance to support our clients’ transitions, accelerate innovation to help scale up solutions to climate change, and build global partnerships to ensure investments are quickly channeled into sustainable projects.
He added: “Across broader sectors, we are seeing companies feeling the pressure of changing customer demands, for example, asking for less plastic packaging or single-use plastics with consumer goods and the pressure from investors or other large companies within their supply chains to change their practices. The subject is really gaining visibility as we emerge from the pandemic and the companies that adapt quickly and see this as an opportunity, rather than a threat, will be the ones that will thrive in the years to come.